« April 2010 Table of Contents
Top Story: Every last drop
Feed, supplement industries maximize use of fish oil production
By John Snyder
April 01, 2010
Seafood marketers looking to hitch their wagons to the health benefits of omega-3-fatty-acid-rich fish are quick to look for ways to incorporate the message on a label. After all, getting someone who has never liked fish to start eating it - even in capsule form - is a difficult sell.
Consumers are increasingly turning to fish oil capsules to reap the benefits of omega-3 fatty acids. With an aging Baby Boomer population looking to stay on top of the latest health trends, fish oil consumption may grow even more in the future. Data from Packaged Facts, a consumer-market-research firm based in Rockville, Md., put the total nutritional supplement market in the United States at $6.1 billion in 2007. From 2003 to 2007, the market showed a compound annual growth rate of 4.1 percent. Part of that growth was due to fish oil supplements, which saw use within the nutritional-supplement market grow from 3 to 8 percent during that period.
The market potential for fish oil supplements is evident. The International Fishmeal and Fish Oil Organization (IFFO), an industry group based in the United Kingdom, reports that fish oil and fishmeal have been in use for thousands of years by many cultures for a wide range of purposes: in lamp oil, fertilizer, printing ink and soap. In 18th-century England it was recognized for its medicinal qualities, especially cod-liver oil.
However, a large portion of fish oil production is
not consumer-grade but industrial, for use in fishmeal. Driving the fish oil industry are an annual increase in global aquaculture, about 6.9 percent annually, according to the United Nations Food and Agricultural Organization; the need for high-protein animal feed and pet food; and interest in the health benefits of omega-3 fatty acids as food additives and dietary supplements.
Today, nearly all of the fish oil produced worldwide - 700,000 to 800,000 metric tons - is used in aquaculture feed, says Jason Mann, director of purchasing and nutrition for EWOS, a feed producer in Vancouver, British Columbia, Canada.
However, the U.S. piece of that pie still remains relatively small. More than 90 percent of U.S. fish oil production is made up of menhaden, mostly from Chesapeake Bay and the Gulf of Mexico, according to data from the National Marine Fisheries Service.
Other fish-oil-producing countries rely on anchovies, sardines, herring, capelin and, to a lesser extent, more valuable food fish like cod and salmon. More than 80 percent of world's fishmeal and fish oil production originates in 10 countries, according to the IFFO.
The two largest producers and exporters are Peru and Chile, followed by China, Thailand and the United States. Other fish-oil-exporting nations include Iceland, Denmark, Norway, Japan and Spain.
A heightened awareness of sustainability issues over the past few years has pressured the aquaculture industry to reduce the amount of fish oil used in fish feeds.
"Worldwide [fishmeal] production will not grow, and feed should not be dependent on the sea," says Mann. "As a result, since the late '90s, fish farmers have been researching the use of vegetable oils as substitutes in fish-feed mixes."
The food-ingredient and nutritional-supplement industries are also competing for a piece of the world's fish oil supply. Today, state-of-the-art purification processes have made it a safe and important source of omega-3 fatty acids EPA (eicosapentaenoic acid) and DHA (docosahexaenoic acid).
In addition, modern extraction and refining processes developed in the late '80s and early '90s have led to fish oil becoming an important ingredient for the hydrogenation of food products such as margarine and shortenings.
"An increasing amount of fish oil is being used by the nutraceutical industry, but it is not huge, maybe 5 to 8 percent," says Mann. "Compare that to fish oil used in feed. Fish oil can comprise 15 to 20 percent of aquaculture diets; in salmon feed, it can be as much as 50 percent."
Carnivorous species such as salmon depend on long-chain omega-3 fatty acids that come only from marine sources.
Scott Herbert, VP of marketing and development for Daybrook Fisheries, a Louisiana menhaden fleet owner and fishmeal and fish oil producer, operates 11 boats that produce crude fish oil, a grade used in feed for the aquaculture, swine and beef industries.
"We export fish oil and fishmeal to Norway, Chile and Canada for salmon feed, and that market is growing," says Herbert.
Fish oil must also remain competitive with vegetable oils or risk losing market share.
"Today, crude fish oil is selling for about $900 per ton, the same price as rapeseed oil and canola oil. If vegetable oils cost less than fish oil, aquaculture feed producers will make a substitution," says Herbert.
"Once, aquaculture used 100 percent fish oil in their feed mix, but if vegetable oil is cheaper, the mix may look more like 70/30 or even 50/50," Herbert says. "It all depends on which market is paying the most. We are even looking at the biofuel industry as a market."
"Fishmeal prices have gone crazy, but fish oil prices are stable," says Chris Beattie, sales manager for Skretting North America in Vancouver. Skretting is a subsidiary of Nutreco, one of the world's largest fish-feed manufacturers.
"In 2008, prices for fish oil tripled as a result of transportation costs, but they are back down to about $1,500 a ton [for refined fish oil]. Back then, petroleum was trading at $145 per barrel.
"Today's stable fish oil may be related to held-over inventory. It's a supply-and-demand situation," says Beattie, who also points to the recent earthquake in Chile and El Niño conditions in South America as possibly putting a crimp in fish oil production.
Chris Murray, sales manager for Silver Cup, a feed producer in Murray, Utah, is concerned about the El Niño effect on South American
production. If prices rise, vegetable oils could replace fish oil in some feed mixes, "as long as they provide the amount of omega-3 fatty acids the customer requires."
As a result of the increased pressure from the vegetable-oil sector, Ben Landry, director of public affairs for Omega Protein in Houston, is looking for ways to expand the market for fish oil beyond fish feed.
One growth area for Omega Protein is in purified oil used in manufacturing foods such as bread and margarine. Its product, OmegaPure®, is an odorless fish oil that's also free of contaminates and has been approved by the Food and Drug Administration as fit for human consumption.
This product is being offered as an industrial food ingredient that can deliver a balance of EPA and DHA for use in baking, salad dressings, dairy products and beverages. By substituting fish oil as an ingredient, food manufacturers are able to capitalize on the health benefits of omega-3 fatty acids.
Omega Protein (formerly called Zapata Haynie) operates a fleet of 40 purse-seine vessels and owns facilities in Reedville, Va., and Abbeville, La. Fifty percent of Omega's fish, about 250 million pounds, comes from Chesapeake Bay. The company's fish oil production in the Gulf of Mexico is approximately 31 million pounds.
"Like the other companies, we produce fish oil and fishmeal for animal food," says Landry. "We produce different grades [of fish oil] for dairy cows and swine, but the aquaculture market has exploded."
The nutraceutical/dietary supplement side of Omega Protein's business is in the single digits, but growing, adds Landry.
However, a challenge to Omega Protein and others in the fish oil supplement industry came last month, when Oregon environmental group Mateel Environmental Justice Foundation filed a lawsuit against 10 dietary- supplement manufacturers and retailers.
The suit alleges the fish oil supplements contain unsafe levels of polychlorinated biphenyls (PCBs). Omega Protein and other supplement manufacturers vehemently denied the allegations, adding they are in full compliance with FDA laws.
Yet another hurdle fish oil producers face is the sustainability factor: For Chesapeake Bay, the total allowable catch for menhaden has been set at 109,020 tons for fish slated for fishmeal. There is no limit on the offshore menhaden fishery.
Fleet landings are stable and are tied to fishing effort, says Landry. With less than 10 percent of the menhaden stock being harvested, the fishery is in good shape, he says. "There are no other players because this is a very capital-intensive industry," he adds.
The issue of sustainability is also being raised by medical researchers who have been promoting the potential health benefits of fish oil for reducing the risk of coronary heart disease, mental illness, asthma and other maladies.
A paper published by the Canadian Medical Association in 2009 raised the question, "Are dietary recommendations for the use of fish oil sustainable?" The report points to a worldwide decline in all fish stocks, but does not specifically address fish targeted for reduction.
EWOS's Mann is also concerned about sustainability. "These are finite fishery resources," he says. "Taking fish out of the sea for oil is not cost effective. The ratio between feed and fish needs to be 1:1." Mann says that
alternatives to fish oil, such as algae cultivation, are being explored but adds that the production output from alternatives like this are small and as such not suited to industrial feed use.
"There are also lots of fish that are still not being optimized for their oil and going to waste because of the remoteness of the fishery, like in Alaska," he adds.
What remains clear is that the demand for high-quality fish oil continues to grow, whether as a nutritional supplement, food additive, animal food or aquaculture feed. With increased market pressure from all sectors, fish oil's overall sustainability remains a question that will need to be addressed in the near future.
Contributing Editor John Snyder lives in Fryeburg, Maine